AMANKnowledge Contributor
If the cash reserve ratio is lowered by the RBI, its impact on credit creation will be ?
If the cash reserve ratio is lowered by the RBI, its impact on credit creation will be ?
If RBI reduces the cash reserve ratio, credit creation will increase. Banks have more money at their disposal when the CRR requirement is reduced, which can subsequently be utilized to create credit in the economy. When determining the base rate, one of the reference rates is the Cash Reserve Ratio.